Zimbabwe is facing a debt crisis, with the debt stock rising to $18 billion, posing a significant threat to the country’s financial stability. Much of the debt is from China, as the country struggles to access loans from traditional creditors like the World Bank and IMF. The opaque nature of foreign borrowing has worsened the situation.
The debt defaults of the early 2000s have led to punitive penalties, limiting Zimbabwe’s ability to service its debt. Talks with creditors, led by former Mozambican president Joachim Chissano and AfDB president Akinwumi Adesina, are facing uncertainty after the US withdrew support due to a lack of reforms.
Zimbabwe’s debt crisis threatens the stability of its new currency, the Zimbabwe Gold (ZiG), and the provision of essential public services. The country must tackle corruption, prioritize governance reforms, and engage with the international community to address the debt crisis effectively.
Zimbabwe launched a new currency in Harare on April 5, 2024. PHOTO | VOA
The country’s reliance on resource-backed loans has further complicated the debt situation. As Zimbabwe grapples with debt repayment challenges, the need for transparency, governance reforms, and international engagement becomes more pressing to address the crisis effectively.